Next Plc - Competitive Analysis
The objective of such an analysis is to investigate how the organisation needs too form its strategy in order to develop opportunities in its environment and protect itself against competition and other threats (Lynch, R 1997).
The report will use the Porter Model to give an idea what kind of influences exists and how a company can deal with it.
Fig. 3
Porter′s Five Forces Model
Bargaining power of suppliers Source: see Chapter 7
To what extend have the suppliers of NEXT power over the company? In the case of NEXT the influence is limited because there are a lot of providers in this sector. If a supplier were to ask for an increase in his price, or for other better conditions, his customer could easily replace him in a short period of time. Therefore mutual dependence is rated low.
Bargaining power of customers
So far as the customer is concerned he has probably the most power because it is he who buys the product and spends his money. The impact of an individual buyer who goes shopping at a branch and seeks price cuts is likely to be negligible. However speaking more generally, if the phenomenon was multiplied by many thousands of price conscious customers who are not willing to pay the ticket price, management will need to cut prices to avoid losing sales. Because clothing is not very item specific - a pullover is a pullover - whether you buy it from NEXT or Marks and Spencer. The only way to attract consumers to buy a company′s products instead of the competition′s, is to add value, such as label, style, price or quality.
But still there is no guarantee that NEXT will perform better than other clothing companies. The customer decides which product he likes - not the company.
Threat of new entrants to the industry
A threat to NEXT are the new competitors entering the market. Maybe not the small ones because there is a lot of capital needed to go head to head with NEXT - the threat comes more from the big labels, department stores or chain
The report will use the Porter Model to give an idea what kind of influences exists and how a company can deal with it.
Fig. 3
Porter′s Five Forces Model
Bargaining power of suppliers Source: see Chapter 7
To what extend have the suppliers of NEXT power over the company? In the case of NEXT the influence is limited because there are a lot of providers in this sector. If a supplier were to ask for an increase in his price, or for other better conditions, his customer could easily replace him in a short period of time. Therefore mutual dependence is rated low.
Bargaining power of customers
So far as the customer is concerned he has probably the most power because it is he who buys the product and spends his money. The impact of an individual buyer who goes shopping at a branch and seeks price cuts is likely to be negligible. However speaking more generally, if the phenomenon was multiplied by many thousands of price conscious customers who are not willing to pay the ticket price, management will need to cut prices to avoid losing sales. Because clothing is not very item specific - a pullover is a pullover - whether you buy it from NEXT or Marks and Spencer. The only way to attract consumers to buy a company′s products instead of the competition′s, is to add value, such as label, style, price or quality.
But still there is no guarantee that NEXT will perform better than other clothing companies. The customer decides which product he likes - not the company.
Threat of new entrants to the industry
A threat to NEXT are the new competitors entering the market. Maybe not the small ones because there is a lot of capital needed to go head to head with NEXT - the threat comes more from the big labels, department stores or chain